CASE STUDY ON RED BULL ‘GIVES YOU WINGS’

Background

Red bull was introduced in different countries by Dietrich Mateschitz, an

Austrian entrepreneur. He is the founder and co-owner of Red Bull GmbH which is

a privately held energy beverages production and marketing firm based in Fuschl am

See, Austria. Red Bull GmbH has had high growth since its launch as a premium

energy drink because of its innovative marketing strategies and innate ability to

understand its customers and the market

In 1987 Mateschitz started selling Red Bull Energy Drink on the Austrian

market. This was not only the launch of a completely new product, it was the birth

of a totally new product category. The Red Bull established the energy drink market

in many countries and as an icon of the extreme sports subculture, the company has

pioneered not only the energy drinks market but also the use of sport as a brand

extension. The product has been successful around the world due to its marketing

campaign which claim that it can improve athletic performance. The key element of

Red Bull’s brand identity is they are considered both as an established drinks

company and as a brand with a successful sporting history.

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 The proliferation of new media channels and user generated content has

resulted in a frightening loss of control for many marketers. In keeping its brand

values 2011 saw an extremely dynamic expansion of Red Bull’s media activities.

Red Bull’s business plan defies conventional advertising in favour of marketing

through its own events, shows and publications.

Red Bull continues to comfortably lead the global energy drinks market in

both volume and value terms. However, the threat from The Coca-Cola Company

(TCCC) and PepsiCo has been mounting through agreements with energy drinks

such as Monster and Rockstar. Long term focus for Red Bull is to remain relevant

with the core audience and retain its edgy image with its consumer group which may

become increasingly difficult with the brand’s status as a major global brand which

achieved mass market success. New market entrants may become more attractive to

the new generation of young consumers who want to be different and for whom the

mass market Red Bull may no longer be cool or trendy enough. Red Bull’s plans for

growth and investment remain just as ambitious, the foundations laid within youth

culture leading to the company’s market dominance to an innate ability to understand

its customers.

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I. TIME CONTEXT:

When rumours began circulating that the drink contained ecstasy, was made

with bull’s testicles and was liquid amphetamine. The rumours spread and a group

of worried mothers campaigned to have it banned asserting that it led to drug use.

II. VIEWPOINT:

Dietrich Mateschitz, an Austrian entrepreneur who changed the landscape of

the beverage industry by creating not just a new brand but a whole new category

which is the energy drink.

III. CENTRAL PROBLEM:

How can Red Bull remain relevant with the core audience and retain its edgy

image with its consumer group which may become increasingly difficult with line

brand’s status as a major global brand which has achieved mass market success.

IV. OBJECTIVES:

To redefine Red Bull’s marketing strategy and increasing expectations to

maintain their success.

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V. AREAS OF CONSIDERATIONS:

STRENGTHS:

1. Red Bull market around the world which has high growth since its launch

as a premium energy drink.

2. Innovative marketing strategies and innate ability to understand its

customers and the market.

3. The product arrived in its foreign markets in Singapore and Hungary in

1989 and 1992.

4. Red Bull achieved the desired figures in terms of sales, revenues,

productivity and operating profit.

5. Red Bull is a mature product in the energy drinks sector. Identified as the

original energy drink with a believable and proven effect.

6. The success of the world’s No. 1 energy drink is shared by the company’s

8,294 employees around the world in 164 countries.

7. Successful in communicating its core brand values of individuality,

humour, innovation and nonconformism.

8. Utilized regional marketing targeting trendy nightlife spots and student life

and specifically employed students as brand representatives.

9. Marketing campaign claim that it can improve athletic performance.

company and as a brand with a successful sporting history.

11.The company has pioneered not only the energy drinks market but also the

use of sport as a brand extension.

12.Caters to customer’s needs.

WEAKNESSES:

1. The products are above the energy drinks average price. Buyers tend to

think twice at the time of purchase.

2. Limited range of products compared to other competitors. Red Bull has a

limited product portfolio compared to the rising number of competitors

bringing many other flavour variants.

3. There has been issue that the drink contain ecstasy, was made with bulls

testicles and was liquid amphetamine. The relatively high caffeine and taurine

content of Red Bull makes the brand highly vulnerable to regulatory controls.

4. Delayed to secure food and drug authority approval of its contents.

OPPORTUNITIES:

1. Enhance nutritional aspects of the product.

2. Consider global expansion to increase sales. Accelerating the marketing

and sponsorships in these markets will be an advantage for Red Bull.

3. Offer new flavours to keep or improve its market shares.

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4. Increase mass media promotions and new strategy to attend the need of

young consumers.

5. New production facilities in emerging countries to make its retail price

more competitive. They should also consider building production sites in

Asia.

THREATS:

1. Health concerns related to the drink wherein worried mothers campaigned

to have it banned asserting that it led to drug use.

2. Limited to a specific target market group that is aging

3. Growing market in national and regional competitors.

4. Increase in marketing costs.

5. Threat from The Coca-Cola Company (TCCC) and PepsiCo has been

mounting through agreements with energy drinks such as Monster and

Rockstar.

6. New market entrants may become more attractive to the new generation of

young consumers who want to be different and for whom the mass market

Red Bull may no longer be cool or trendy enough. Competition is

becoming more dangerous in terms of marketing actions.

7. New entrants of the same project will divide foreign and local investor.

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VI. ALTERNATIVE COURSE OF ACTIONS

There are alternatives that Red Bull can use to solve their marketing

issue which includes extending the product line, expanding globally,

increasing the availability of their products and increasing mass media

promotions. However, there are advantages and disadvantages associated with

each alternative as follows:

1. Extension of product line

Advantages:

a. To compete with other company

b. Cater other market needs

Disadvantages:

a. New product may be unsuccessful

b. Risks on brand loyalty

c. New product may destroy sales of other products

2. Global expansion

Advantages:

a. Increase brand awareness

b. Increase market share

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Disadvantages:

a. Expensive

b. Different government laws

c. Differences on culture

3. Increase product availability

Advantages:

a. Increase market share and profit

b. Increase in loyal customers and attract new customers

Disadvantages:

a. May not be successful in certain segments

b. Expensive

4. Increase Mass Media Promotions

Advantages:

a. Capture new customers and reach larger audiences

b. Increase customer loyalty

c. Increase brand awareness

d. Increase in loyal customers and attract new customers

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Disadvantages:

a. Competitive

b. Expensive

VII. RECOMMENDATION:

After thorough analysis of all the given alternatives, we highly

recommend ACA 3 and ACA 4 because among the given alternative courses

of action, the most beneficial thing to do is to increase product availability to

increase sales and to attract new customers and at the same time increase their

mass media promotions.

Increasing availability of products while keeping the prices the same,

they will be able to offer their products to their customer’s convenience. By

making Red Bull available in supermarkets and vending machines it will be

more convenient to customer by giving them easier access to the product. This

will help them achieve marketing objectives. By making their product in

different locations, there will be an increase in sales. Red Bull should increase

mass media promotions and market their drinks more so that people will be

aware of their product brand.

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VIII. PLAN OF ACTION:

 Increase places where the product can be bought to increase sales and

market share

 Increase awareness through advertising in media to attract younger

audience

 Bring awareness to the positives of the brand

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